SETTING SUN?

JAPAN: THE SYSTEM THAT SOURED
The Rise and Fall of the Japanese Economic Miracle
By Richard Katz
M.E. Sharpe 463pp $68.95 cloth/$24.95 paper

Obituaries on postbubble Japan abound, so who needs another one? Fair question. But anyone with even a fleeting interest in the world's second-largest economy would be remiss not to pick up Richard Katz's Japan: The System that Soured. It is a rich, handy, up-to-date guidebook to Japan's postwar political economy.

Relying heavily on secondary sources, Katz covers ground that will be familiar to Japan-watchers. His emphasis on such old themes as Japan's closed markets and cartels may annoy them. Even so, his combing out of Japan's dual economy and the failure of once-spectacular catch-up policies to work in a mature economy is thorough and informing.

More valuable than the author's analysis are the anecdotes, historical examples, and statistics that are used to show what has been going on in Japan since the end of World War II. Emblematic is his tale of how Kawasaki Steel Corp. played off competing interests within the Ministry of International Trade & Industry to get the scarce financing it needed to become a major mill. This is a prodigious volume of research and storytelling that will induce readers to mark and star sections all the way through.

Yes, the prose can at times be pedantic and repetitious. Specialty publisher M.E. Sharpe isn't renowned for its great editing, after all. Replete with charts, graphs, footnotes, and 13 appendices, it looks and reads somewhat like a textbook--which in part it's meant to be.

Moreover, economist Katz, trained and based in New York, imposes too much orthodox, neoclassical Western economic analysis on a country that requires more subtle explanation. He trashes those who argue that Japanese-style capitalism is different and must be appreciated as such.

Case in point: ''The 'Japanese economic model' that we see today is not, as some have suggested, a different kind of capitalism,'' he writes. ''It is rather a holdover from an earlier stage of capitalism. It is the spectacle of a country vainly trying to carry into maturity economic patterns better suited to its adolescence.''

Many sophisticated analysts of Japan, most notably the so-called revisionists, would beg to differ. They would argue that Japanese institutions--political, bureaucratic, financial--march to a different drummer and that the country should never be expected to become a Western-style political economy.

All the same, this is a book often marked by good thinking and good writing. ''Ultimately, industrial policy is the politics of scarcity,'' says Katz, as he shows how postwar governments favored some industries over others in apportioning access to foreign exchange. In time, the approach yielded to the creation of government-authorized cartels to fix prices, harmonize output, and exclude imports and outsiders. '''Self-control' rather than 'state control' was the dominant mechanism of the post-scarcity era,'' the author concludes. And, if you like such erudition enriched by charts and graphs, so much the better.